This week, Hurricane Sandy drew attention to the increasing climate-related risks for communities and businesses.

More and more companies are recognizing and reporting on actions they’re taking to “mitigate” climate change, reducing greenhouse gas (GHG) emissions through energy efficiency, renewable power, and cleaner vehicles. Now, businesses are finding they’ll also need to “adapt” to more volatile conditions and help vulnerable communities become more resilient. Adaptation means recognizing and preparing for impacts like water stress, coastal flooding, community health issues, or supply chain disruptions, among other issues.

WRI discussed why businesses need to embrace mitigation AND adaptation strategies at the recent Net Impact conference, where I sat on a panel entitled: “Climate Change Adaptation: Mitigating Risk and Building Resilience.” Dr. David Evans, Director of the Center for Sustainability at Noblis, moderated the panel. Other panelists included Gabriela Burian, Director for Sustainable Agriculture Ecosystems at Monsanto, and John Schulz, Director of Sustainability Operations at AT&T.

Why Adaptation Is So Important

Each panelist pointed to reasons why adapting to climate change is becoming increasingly important to their own companies. For example:

At AT&T, potential disruptions to IT networks pose real threats to the company and its customers. Drawing lessons from disasters like Hurricane Katrina, AT&T has started locating critical equipment on the 2nd floor of a building—rather than the ground floor—to avoid future floods.

At Monsanto, the focus is on meeting the future food needs of a growing global population. Global warming means new challenges for farmers, who must adjust to changing growing seasons and water availability.

Critical Issues for Corporate Climate Leaders

AT&T and Monsanto shared stories about their own experiences with climate change adaptation, but it’s important to note that this issue will increasingly impact all companies—from small, mom-and-pop shops to global corporations. Companies like Coca-Cola are publicly acknowledging climate risks as part of their financial reporting. More leadership is needed, as businesses start to look at their own climate risks as well as impacts on their customers and local communities.

In the course of the Q&A, the Net Impact session highlighted five important topics that corporate leaders will need to keep in mind:

Managing diverse climate change impacts across global operations: Companies that operate in multiple regions may face very different climate change impacts (for example, sea level rise, increasing temperatures, drought, or floods) in different locations. Corporate strategies must be developed locally and in partnership with departments across the organization’s various locations.

Finding and creating better decision-making tools: Companies will need information to help them factor potential climate risks into future investments and strategies. Experts in the audience and on the panel pointed to WRI tools like the Aqueduct global water risk maps and the forthcoming Sustainability SWOT (sSWOT) as examples of the type of resources needed to guide forward-looking, smart business decisions.

Recognizing underlying drivers of vulnerability: A changing climate is just one of several variables that contribute to business and community vulnerability. For example, population growth and mass consumption are two of the underlying drivers that came up in discussion as places to focus when seeking to increase community resiliency.

Taking a broad view of risks and opportunities by engaging stakeholders: A narrow view of climate impacts may unintentionally increase a company’s (or its customers’ or surrounding communities’) vulnerability to climate change. Looking just at the company’s own facilities along the coastline, for example, ignores risks in the supply chain. Similarly, the potential health impacts of climate change—like an increasing threat of water-borne disease—might not seem immediately relevant to some businesses, but it may impact employees or communities in future growth markets. Proactive stakeholder engagement is essential for identifying such risks, which for some companies, may also be opportunities to provide new solutions.

Reaching out to new partners: Effective strategies for adapting to climate change may in some cases be a source of competitive advantage (for example, in developing a new product or service). However, in other cases, adaptation measures can be pre-competitive, meaning that even bitter rivals (think Coca-Cola and Pepsi) could collaborate to create better information tools or share water resource management techniques.

Corporations Must Act Quickly

The list above is a partial one. Corporate action to adapt to climate change will certainly involve many more ideas and strategies—many of which are still being developed. More action is needed, and the important take-away from the discussion at the Net Impact conference is that action must start now.

If Hurricane Sandy is any indication of what is ahead, it is in the best interest of business to be proactive about risks and start making solutions happen. Companies need to be talking and working with customers, suppliers, and other companies—as well as investors, policymakers, and local communities—to both mitigate and adapt to climate change.